We recently co-hosted a Smarter Connections dinner for Chairs, NEDs and CEOs of growth-stage tech companies with private equity firm, Sovereign Capital Partners, on the topic of Digital Transformation, and were delighted to have Dr Marko Balabanovic, CTO at Digital Catapult, as our speaker.

Marko started by giving some context on the technologies that we use today, splitting them into three core layers:

• The network layer: otherwise known as the web, the network layer uses a series of protocols such as http and html on top of the internet, as well as mobile networks and mobile data, to enable connections between people.
• The computation layer: this relates to what we do with the network. Today, it has largely become a globally collaborative effort utilising a lot of open source technology and agile methodologies, as well as cloud technologies, to ensure we use what we need when we need it.
• The interaction layer: this is defined largely by the smartphone and the availability of a powerful computer in our pocket as well as great user experience (i.e. interacting via multi-touch or swipe).

If we look, however, at what happens next, we can see some profound changes across all three layers, some of which are approaching very rapidly.

• Changes in the network layer include the roll-out of low-power networking, some of which does not require licensed spectrum, to support high volumes of low-power sensors and devices, i.e. the Internet of Things, which is already a reality. The other more fundamental change, as yet still in pilot, is the roll-out of 5G which will offer faster, higher capacity network speeds, but also more importantly the ability to rapidly adjust capacity and priority according to need, close to the point of need.
• In the computation layer, we will increasingly move to self-learning systems, whereby the system itself will learn what is required and will automate the writing of the code. There is a lot of investment and research going on here, and a very rapid rise in capability. Marko cited the example of speech recognition, which has now improved above a threshold level such that it is widely considered acceptable. As a result, we’re seeing rapid adoption of devices such as the Amazon Alexa, while speech synthesis is also now “good enough” that it is not immediately obvious that you are talking to a machine (e.g. Google’s AI appointment booking demonstration).
• At the interaction layer, technologies such as AR/VR and other immersive technologies are now also reaching a tipping point such that you actually feel like you are in the experience. This has interesting implications across a number of areas, for example the creative industries, where you can participate in entertainment rather than watch it, or in healthcare where VR is already being used to help the rehabilitation of stroke victims.

A vigorous discussion ensued, given attendees came from a diverse group representing a number of different perspectives and industries. Many people shared some concerns. While the advances in technology are exciting, there are profound questions arising in a number of areas, that as yet people and policy makers are struggling to answer. These include:

• Accountability: for instance, if VR can be used to rewire people’s brains, how do we know that this will not be used maliciously?
• Privacy: how do we protect people’s personal identity and privacy if, for example, they upload intimate body measurements to assist in trying on clothes online?
• Social responsibility: if autonomous systems are already automating human interactions in companies through robotic process automation, what does this mean for the future of employment and work? If autonomous driving can offer huge advantages, for example removing the vast proportion of car accidents that arise from drivers under the influence of alcohol or drugs, what does it mean for the edge cases where decisions need to be taken that might mean one person dies in an accident rather than another?

From a sector perspective, attendees discussed industries such as manufacturing, where adoption of digital technologies is just starting to gain momentum, with examples given including the use of cameras with machine vision and deep learning enabling the visual inspection of processes. Financial services was also given as an example, where most of the existing incumbents have avoided fundamentally redesigning their systems, instead putting digital wrappers on top, whereas newer entrants which are digital by design have been able to deliver materially different user experiences, based on materially different cost structures.

We concluded the evening by noting that in any transformation in behaviour, the main barriers are with people. People are generally wary of change, particularly when it involves something different and unknown. But if you can engage them in the process of change, and help empower them to own the outcome, then the likelihood of success is much higher.

About the Speaker

Marko has impeccable credentials as a leader in the digital and online space. Before Digital Catapult, his prior roles included being part of the technical leadership team for Lastminute.com, one of the original disruptors in the online travel space, as well as at Betfair, which pioneered online betting. Marko is now CTO at Digital Catapult – an innovation centre funded by a combination of Innovate UK and industry, with the mission to accelerate the adoption of advanced digital technologies in the UK. He is also a Non-Executive Director of NHS Digital, helping to drive innovation in the health service.